"I saw her again last night
And you know that I shouldn't
To string her along's just not right
If I couldn't I wouldn't
But what can I do, I'm lonely too
And it makes me feel so good to know
You'll never leave me."Dennis Doherty, of the Mamas and the Papas, 1965
My Canadian friend, Sandford Borins, called what Trump did to Canada a "shakedown."
Trump did what he was famous for doing to his vendors and contractors. He bankrupted them by stringing them along, getting them to do work for him fronting the cost. Then, the work finished, he would refuse to pay, telling them to sue him to try to collect. Trump would threaten to keep potential payment tied up in litigation for a decade. His lawyers would tell vendors to settle for a big discount. Something is better than nothing.
Trump just did this to Canada. Canada built a bridge connecting the U.S. and Canada, expecting to collect toll revenue from it. At the last minute Trump said he wanted the U.S to get half the revenue, otherwise he wouldn't open the bridge at the U.S. side. Trump has leverage. The money was spent. Canada is stuck. The U.S. can screw Canada, and they are still stuck. They can never leave North America.
Americans knew Trump's character and history when we elected him. This isn't just Trump being Trump. This is the USA doing this. This is on us.
American readers need to hear how a Canadian feels about this.
Sandford Borins is a college classmate. He is Canadian. He is Professor of Public Management Emeritus at the University of Toronto. He writes about Canadian politics and Canada-U.S. relations in his own website at https://sandfordborins.com, where this post appeared yesterday. He and his wife, Beth Herst, recently published a book, Public Representations: Screen Stories, Narrative, and the Public Sphere, which explores how popular screen stories represent and interact with politics, governance, and the public sphere.
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| Sandford Borins and wife Beth Herst |
Should We Have Accepted the Bridge Shakedown?
I have been following the conflict between Canada and the US about the Gordie Howe Bridge for several weeks. It may seem like yesterday’s news, given the Trump Administration’s most recent threats of retaliatory tariffs to take effect on August 19 and possible wildfire-based tariffs or sanctions. But the bridge is important, both for the issues the outcome of the conflict raises and what it says about the current state of the relationship between Canada and the US.
I will look at three issues. First, did the Government of Canada have grounds to compel the Trump Administration to open the bridge? Second, what did agreeing to the Trump Administration’s shakedown cost Canada? Third, should we have agreed to the shakedown or taken some other course of action?
A Worthless Signature?
The 2012 Agreement to build, finance, and operate the bridge was signed by the Government of Canada and the State of Michigan and two of its agencies. The Obama Administration strongly supported the project, and it co-operated in planning the US Customs toll plaza and border infrastructure. But it did not sign the agreement. In hindsight, it would have been better if the Obama Administration had signed an agreement that committed all parties to operate the bridge as soon as construction was finished. Perhaps neither the Harper Government nor the Obama Administration could have imagined that a subsequent counterparty government would refuse to open the bridge.
The absence of such an agreement made it easier for the second Trump Administration to hold the bridge hostage. That said, the second Trump Administration has refused to honour treaties previous administrations, including the first Trump Administration, have signed. The Canadian Government would have had a better legal case if the Obama Administration had made a written commitment, but legal remedies are slow.
What Did the Shakedown Cost?
The terms of the agreement between Canada and the US have just been posted on the bridge website. Financially, the essential point is that for the next 15 years, 50 percent of net revenues, defined as tolls minus operating costs will go to a fund “solely controlled by the Government of the United States.”
I used ChatGpt to estimate what this will cost Canada (in Canadian dollars). The operating cost of the bridge is approximately $100 million. The Government of Canada paid the entire cost of the bridge, incurring $6.5 billion in debt. Assuming an amortization period of 35 years and using the long-term interest rate of 3.95 percent paid by the Canadian Government, annual debt service cost is $350 million.
Let’s assume that tolls cover operating cost and debt service but no more. ChatGPT estimates that tolls of approximately $20 per passenger car and $100 per truck would generate the necessary revenue, and these tolls seem reasonable.
The net present value of debt service (repayment of principal and interest) over 15 years is approximately $4 billion. A 50-50 split of the debt service gives Canada $2 billion and the US $2 billion. The shakedown is costing the Government of Canada $2 billion in today’s dollars over its 15-year term. We don’t know if this change in the original agreement will be renewed 15 years from now, or if both parties will revert to the original agreement in which Canada would get all of the net revenue until the debt has been retired.
How significant is $2 billion? One measure relevant to the relationship between the US and Canada is that the US would like Canada to buy 88 F35 fighter jets at a lifetime cost of $28 billion. $2 billion would cover the cost of 6 F35s. Why not reduce the F35 order by 6 off the top?
A second aspect of the agreement is that major toll rate adjustments, for example “toll rates falling below the average of comparable regional crossings” will require the agreement of the Trump Administration. The intent here is to protect the Maroun family – owners of the Ambassador Bridge (the “comparable regional crossing”) and major donors to Trump – from being undercut by lower tolls on the Gordie Howe Bridge.
Should We Have Agreed to the Shakedown?
Prime Minister Carney has not said much while his government was negotiating. I agree that it is not appropriate to negotiate in public. Now that the negotiation is complete, he owes the Canadian public an explanation. If the House of Commons were in session, this would be an obvious topic for grilling the government. Even so, I expect Carney would say little, claiming the bridge agreement is part of ongoing trade and security negotiations with the US.
When it became clear last February that the Trump Administration was planning extortion, the Carney Government could have planned to resist. Trump is doing poorly in the polls, the midterm elections are a little more than three months away, and Michigan is a battleground state. The Carney Government could have refused to negotiate, and Michigan Democrats would have blamed the unopened bridge on Trump. As a reader of this blog suggested to me, the Carney Government could have opened the toll plaza on the Canadian side to emphasize the point. The Trump Administration might have responded by blockading the lanes of the bridge leading from the US to Canada, but that would have only dramatized Trump’s refusal to open the bridge. If I were in Carney’s oxfords, I would have refused to negotiate before the midterm elections.
If we needed any more proof of what the Trump Administration is about, the Gordie Howe Bridge has provided it. Bullying and extortion are their modus operandi. If this agreement is an example of what Mark Carney’s “nice guy” approach gets us, we must try something else. Gordie Howe – the original Mr. Elbows – would understand.
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6 comments:
I worked in corrections in Alaska for 30 years and 80% of the staff would be MAGA friendly. I cooperated and was respectful toward them and in spite of my well known political beliefs, I was well liked and got cooperation back. Many of my colleagues in other prisons did not get the same level of cooperation and I was often asked what was my secret sauce. The answer was be trustworthy, respectful, while being assertive in a low key manner. In my opinion nice guys finish first. Sorry Canada, I wish the US was a better country, neighbor, than it actually is.
Trump is famous for stiffing his contractors. I saw him do it in his Atlantic City casinos. One time he refused to pay for some work he said he didn't like, yet allowed the same contractor to bid on his next project. Going to court is expensive and takes a long time. Some contractors just said the hell with it and ate the cost, others had to declare bankruptcy. Why anyone would do business with him is a mystery. He cheats people because he CAN and puts money in his pocket. That's what any Mafia Don would do. If he wasn't president, he'd be in jail.
Just think: Voters put this crime boss in our nation's highest office twice. What a basket of deplorables! As Peter says, this is the USA doing this. This is on us.
Trade relations between Canada and the United States have often been competitive, with each side seeking an advantage. This kind of behavior is common in a thriving marketplace. Extortion usually leads to two outcomes at once: losing a customer and losing credibility. Canada controls many chokepoints for raw materials and resources, including electricity, water, softwood lumber, grain, and minerals. Over the long term, Canada may decouple from the United States and strengthen ties with more favorable global trading partners. The world is watching the Trump administration’s behavior and signaling disapproval of the United States.
Right now it is embarrassing and infuriating to be American, for everyone but diehard MAGA types -- who seem to have no sense of decency. Trump treats the whole world, including non-rich American citizens, with the same arrogance and contempt. All we can do now is hope Democrats retake control of Congress, wait for a much different federal administration, and then try to make amends.
The United States will never be allowed to atone. The damage to our credibility is complete. We have told the world that we do not need it. The world will say to the United States, “We can form our own alliances and cut you out.” The result will be the slow erosion of our economy and a continual decline. Wealthy U.S. citizens can live as they like anywhere in the world, but the average U.S. citizen will suffer another Great Depression as wealth is offshored.
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